Case Law Details
Nine Dot Nine Mediaworx (P) Ltd. Vs ITO (ITAT Delhi)
Once assessee had submitted that no expenditure incurred for earning dividend income, the AO was under legal obligation to demonstrate as to how he was not satisfied with the contention of assessee and only, thereafter, he could have proceeded to make a disallowance. As was evident from the assessment order, satisfaction of AO before invoking section 14A read with rule 8D was missing, therefore, disallowance could not be sustained.
FULL TEXT OF THE ITAT JUDGMENT
ITA No. 863/Del/2016 is preferred by the department against the order dated 23.12.2015 passed by the Ld. CIT (A)-20, New Delhi for assessment year 2009-10 whereas ITA No. 1262/Del/2016 is the assessee’s cross appeal for the same year.
2. Brief facts of the case are that the assessee company is engaged in the business of organizing events, consulting and related services. The return of income was filed declaring loss of Rs. 4,50,71,693/-. Initially, the return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and subsequently, the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had claimed legal and professional charges of Rs. 2,48,12,998/- in its profit and loss account, out of which Rs. 68,25,331/- had been paid to three non-resident Indian parties on which the assessee had not deducted tax at source. The Assessing Officer made a disallowance u/s 40(a)(i) of the Act in respect of this payment and made an addition of Rs. 68,25,331/-to the income of the assessee. Further, the Assessing Officer also made a disallowance of Rs. 5,02,462/- u/s 14A r/w Rule 8D. Apart from this, the Assessing Officer also made an addition of Rs. 10,88,621/- in respect of alleged capital expenditure which had been debited to the profit and loss account. The Assessing Officer also made a disallowance of Rs. 5,30,996/- u/s 43B of the Act which pertained to unpaid service tax. Apart from this, the Assessing Officer made a disallowance of Rs. 5,85,782/- being ad hoc disallowance @ 25% of the total expenses on conferences and seminars. The Assessing Officer also made a disallowance of Rs. 1,02,69,572/- u/s 40(A)(2)(b) of the Act with respect to salary paid to Directors. The assessment was completed at a loss of Rs. 2,52,68,929/-.
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